Key features

Production: Total production of platinum-in-concentrate of 98 600oz was an increase of 12% on FY2007. Production of PGMs-in-concentrate rose by 12% to 206 500oz.

Tonnes milled was up 16% to 2.36Mt in FY2008, the second year of operation at Two Rivers (FY2007: 2.04Mt).

As a consequence of industrial action towards the end of the previous year, which affected the current years output, and geological (split reef at the main decline) and geotechnical constraints, full production was not achieved as originally scheduled. The split reef resulted in increased dilution and contributed to a decline in head grade to 3.99g/t (5PGE+Au) in FY2008 from 4.24g/t (5PGE+Au) in FY2007.

Development of the north decline has progressed well and by year-end monthly underground production from both declines exceeded plant capacity.

Metallurgical recoveries declined to 74.2% from 77.5% in FY2007, largely owing to the reduced head grade. Results of a review of the plant following teething problems highlighted three areas of potential improvement. Firstly, the installation of additional crushing capacity ahead of the mills will lead to increased mill throughput; secondly, additional cleaner circuit flotation cells will aid recovery; and, lastly, expansion to filter capacity at the back end of the plant will cater for additional volumes of concentrate. These modifications will enable the plant to process at least 225 000t a month, which is expected from FY2010. A stockpile of one months mill throughput is currently being maintained.

Costs: Costs per tonne milled rose by 92% to R351/t. These costs were distorted by the treatment of stockpiled material treated in the previous year. Also, the higher than expected cost of maintenance of the trackless mining equipment and significant increases in the costs of steel and transport. The average cost per platinum ounce rose to R8 432/oz, an increase of 98%. The higher cost base offset any gains from the increase in platinum produced.

Capital: Capital expenditure for the year totalled R357 million, down from R488 million in FY2007 and in line with the ramp up to full production. Capital expenditure in FY2008 focused on the completion of the original Two Rivers project (R1.4 billion), and the development and equipping of the north decline. The balance was spent on fleet maintenance and operating capital to ensure that production is sustained.

Planned capital expenditure for FY2009 of R400 million will include the completion of the Two Rivers project and continued development of the north decline. Most of this will be allocated to plant optimisation (R132 million) while smaller amounts will be expended on decline development, trackless fleet maintenance, conveyor belt extensions and the establishment of the first underground workshop.

Growth: Future growth potential exists with the exploitation of the Merensky Reef. Although preliminary drilling on the Merensky Reef is planned for 2009, a feasibility study will only be considered in the long term.